TIOL-DDT 849 · the untouched capture
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<!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.01 Transitional//EN" "http://www.w3.org/TR/html4/loose.dtd"> <html> <head> <title>Untitled Document</title> <meta http-equiv="Content-Type" content="text/html; charset=iso-8859-1"> </head> <body> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#663399" size="3">TIOL-DDT 849 </font><br> 22.04.2008 <br> Tuesday </strong></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>What is intelligence? Ask DGCEI or DRI </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGCEI stands for Directorate General of Central Excise Intelligence and DRI for Directorate of Revenue Intelligence. The officers working in these organizations are required to gather intelligence of tax evasion or illegal importation by various means like developing informers and information gathered from various sources. But over a period of time, the definition of intelligence is taking a new shape. Intelligence is defined as actionable information. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Recently a DGCEI formation demanded duty on Agricultural Grade Zinc Sulphate ( AGZS ) used as micronutrient. The intelligence is: </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Agricultural Grade Zinc Sulphate was classifiable under Ch 28332610 of the Central Excise Tariff attracting NIL rate of duty. However, while making amendments to the central excise tariff in tune with the 8 digit customs tariff, the entry 28332610 was omitted with effect from 1.1.2007. Thus AGZS became classifiable under sub heading 28332990 attracting duty at the rate of 16%. However, the Government issued Notification 36/2007 CE dated 9.10.2007 exempting the AGZS used as micronutrient. So during the period from 1.1.2007 to 8.10.2007, all the manufacturers have to pay duty on AGSZ . </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Now, in the maze of amendments, the government forgets to continue the exemption for some time and this is <strong><font color="#FF6633">INTELLIGNCE </font></strong>! As per the DGCEI , the assessees have wilfully continued to clear the goods at Nil rate from 1.1.2007 with an intention to evade payment of duty by suppressing the fact that there was no exemption for the interregnum period. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The intelligence of DRI is no better. Recently DGFT banned export of non basmati rice and the related notifications were amended for nearly 8 times in 15 days. In <a href="http://www.taxindiaonline.com/RC2/inside2.php3?filename=bnews_detail.php3&newsid=6304" target="_blank">DDT 733 02.11.2007</a> , we gave a list of amending notifications and on 11.12.2007, DRI issued an Alert Circular listing out all the amendments and passed it on as intelligence to the field formations, with a direction that “ If any case is booked on the basis of this Circular, the same may be brought to the notice of this office. ” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Moral: You don't need to go too far to gather intelligence – watch your Board closely; they may forget to issue a notification or watch the DGFT; they may issue too many notifications. And lo and behold there are cases before you! </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#990000">Right</font> FM does not amuse <font color="#990000">Left </font></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“One should come forward to repudiate any ideology which professes that growth indices are irrelevant,” said the FM, without mentioning Left parties, at a seminar organised by the District Congress Committee in Kannur , Kerala on Sunday. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram pointed out that the country had achieved 8.8 per cent growth during the four-year Congress-led UPA rule, compared to 5.8 per cent in the tenure of the previous BJP-led NDA government. Economic growth close to 9 per cent would help India double its GDP over the next decade, he said. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“If we stand to remain at 3.50 per cent growth rate—that the nation could achieve during 50 years after Independence —we will continue to be poor for many more years,” the Finance Minister cautioned. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Chidambaram said Kerala's neglect of infrastructure development was what still made it trail on the development front. While states like Maharashtra and Andhra Pradesh are taking huge leaps in key areas like energy, roads, bridges and ports, Kerala continues to lag. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He said that while Gujarat and Kerala had a similar potential for developing their coasts, Gujarat had forged ahead with joint ventures to develop its ports while Kerala was unable to make use of its obvious strengths. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The UPA Government has been criticised by the Left parties for focusing too much on the GDP growth and stock market while overlooking the interest of the common man, who is suffering because of inflation. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">According to Chidambaram, the current inflationary spiral was transient, and had a lot to do with “inflationary expectations” pushing up prices. “Generally, when people believe that the prices will rise, we call that an inflationary expectation. Inflationary expectation is actually worse than inflation. When people think the prices will rise, they pay more and buy more” </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He was confident that prices will moderate by themselves. “The international prices will moderate. When international prices moderate, Indian prices will also moderate,” he said. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“I have brought in cuts in customs and excise duty. I have cut income tax that put more money in the pocket,” the Finance Minister said. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">He also said that it was not the first time that inflation had gone beyond 7 per cent in the country. “When the UPA Government came into office, inflation was 7 per cent. We brought it down to 3.11 per cent,” he said. </font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of skimmed milk powder – not eligible for VKGUY </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended Handbook of Procedures, Vol. I, to stipulate that Export of Skimmed Milk Product ( SMP ), Casein and any other Milk Product shall not be entitled for the benefit of VKGUY Scheme and Focus Market scheme with immediate effect. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn005.htm" target="_blank">DGFT PUBLIC NOTICE NO. 5 (RE-2008)/2004-2009, Dated: April 17, 2008 </a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Export of skimmed milk powder – not eligible for DEPB </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">DGFT has amended Schedule of DEPB Rates, to stipulate that Export of Skimmed Milk Product ( SMP ), Casein and any other Milk Product shall not be entitled for DEPB rate under Sl . No. 22C and 22D of the Miscellaneous Product. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="http://www.taxindiaonline.com/RC2/subCatDesc.php3?subCatDisp_Id=47&filename=notification/dgft/2008/dgft08pn004.htm" target="_blank">DGFT PUBLIC NOTICE NO. 4 (RE-2008)/2004-2009, Dated: April 17, 2008 </a></font></p> <p align="center"><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Better pay for defence and civil servants – champion is PM </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">“I would like our civil and defence services to be properly rewarded. I also believe that the tax payers will not grudge anyone of us better remuneration as long as we are serving the best interests of our people, most efficiently” – this is the Prime Minister assuring the civil and may be not so civil servants that they are likely to get a better deal than what the Pay Commission has recommended. Let's hope his FM agrees. The PM had been a government servant but the FM had no such bitter experience. </font></p> <p align="center"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><b><img src="http://www.taxindiaonline.com/RC2/image/stories/ddt_31.gif" alt="Legal Corner Icon" width="191" height="160" hspace="5" border="0" align="left" /></b></font></strong></font></strong></font></strong></font></font><font color="#006600" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Jurispruden <font color="#FF6633" size="5">tiol</font> – Tomorrow's cases </strong></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Central Excise </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Larger Bench rules that <em>amount mentioned </em> in Rule 173Q ( 1) of the 1944 Rules or Rule 25(1) of the 2002 Rules <em>is the maximum, and not the minimum </em></strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Rule 25 of the present CER , 2002 concerning imposition of penalty carries the following clause <br> <br> then, all such goods shall be liable to confiscation and the producer or manufacturer or registered person of the warehouse or a registered dealer , as the case may be, <strong><em><font color="#FF6633">shall be liable to a penalty not exceeding the duty on the excisable goods</font> </em></strong>in respect of which any contravention of the nature referred to in clause (a) or clause (b) or clause (c) or clause (d) has been committed,<font color="#FF6633"> <strong><em>or [rupees two thousand]*, whichever is greater. </em></strong></font></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">Reference to the Larger Bench has been made for providing an answer to the following question: <br> "Whether Rs. 5000/- is a minimum penalty that is required to be imposed in terms of Rule 25 of the Central Excise Rules, 2002?" </font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Cenvat Rule 6 issue goes to Larger Bench – SC decision in Chandrapur was delivered in context of rule 57C and not 57CC or rule 6 of CCR – present rule is unambiguous and clear – matter referred to LB </strong></font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong><font color="#FF6633">SC</font></strong> decision in Chandrapur was delivered in the context of rule 57C & not 57CC or rule 6 of CCR – present rule is unambiguous & clear – matter referred to LB as coordinate benches hold contrary views - Tribunal. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">The provisions of Rule 6 are unambiguous and clear. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">In terms of rule 6, the assessee who has not maintained separate inventory and has taken credit on common inputs used in the manufacture of dutiable and exempted products (except in the cases mentioned in the provisions contained in sub-rule (3 )( a)) has no option but to reverse 8% of the price of the exempted goods as per provisions of sub rule 3(b) of the said rule. </font></p> <p align="justify"><font size="2" face="Verdana, Arial, Helvetica, sans-serif">If the appellants have consciously chosen to disregard the clear and unambiguous provisions of Rule 6, which are not capable of two interpretations, they have done so at their own peril and they cannot plead clemency and mercy later on in the name of equity and pray for relieving them of the liability to pay 8% of the price of the exempted goods. </font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax </strong></font></p> <p align="justify"><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>Income Tax cannot add to assessee's income based on CBI records, when CBI itself had dropped proceedings: ITAT </strong></font></p> <p align="justify"><strong><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif">ORIGINAL</font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"></font></strong><font size="2" face="Verdana, Arial, Helvetica, sans-serif"> return was field by the assessee on 31 st August , 1992 at an income Rs.74,190 /- and the same was assessed on 27.1.93 on the returned income. Thereafter notice u/s 148 was issued on 30 May, 2001 against which assessee filed return of income on 6.6.2001 declaring same income. The name of the assessee is Shri .<font color="#FF6633"> <strong>Pranab Mukherjee </strong></font></font></p> <p align="justify"><font color="#663399" size="2" face="Verdana, Arial, Helvetica, sans-serif"><strong>See our columns tomorrow for the judgements </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Until Tomorrow with more <strong>DDT </strong></font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Have a nice day. </font></p> <p align="justify"><font color="#FF6666" size="2" face="Verdana, Arial, Helvetica, sans-serif">Mail your comments to</font><font color="#FF6633" size="2" face="Verdana, Arial, Helvetica, sans-serif"> </font><font size="2" face="Verdana, Arial, Helvetica, sans-serif"><a href="mailto:vijaywrite@taxindiaonline.com">vijaywrite@taxindiaonline.com </a></font></p> </body> </html>